The problem I'm having though is turning internet sharing on. I go to system preferences and select internet sharing from airport and then place a tick in the Ethernet option, yet it still comes up that its turned off with a red light next to it. I have entered my password etc.

Don't do an internet share to your X360. I used to, and it was just terrible most of the time, kept complaining of restricted NAT(even though the connections were just bridged) and I kept lagging on Xbox Live. If you really HAVE to have wireless access for the 360, I really recommend the overpriced but highly functional adapter.

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